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Worldwide Exchange

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

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U.s. 24, China 12, Washington 12, India 10, Citi 8, Us 6, Mastercard 5, Sandy 4, Obama 4, Russia 4, Europe 4, Jim 3, New York 3, Hawaii 3, Cme Globex 3, Latin America 3, Apple 2, Michael Mcnamara 2, Citi.com Pricerewind 2, David Katz 2,
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  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    December 26, 2012
    5:00 - 6:00am EST  

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a bull market somewhere. i promise to find it for you here on "mad money." i'm jim cramer. see you tomorrow. coming up on "worldwide exchange," retail reality check. it's the day after christmas, early data shows the slowest growth in spending since 2008 this holiday season.
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we're crunching the numbers for you. the u.s. is set to go over the fiscal cliff in five days. that means taxes will go up for nearly every american. dramatic spending cuts will kick in. president obama and congress will be back from vacation tomorrow. but will anything get done? plus, wild winter weather sweeping through the country. we'll bring you the latest details on which part of the u.s. could be hit next. cnbc's "worldwide exchange" starts now. and welcome to a special edition of reside worldwide. ross andcle reoff today for boxes day in -- kelly are off today for boxing day. for now, you is us. >> we'll start with a brief check on the markets. energy and metals are trading higher now, wtis up about 55 cents. brent crude up 65 cents. also want to check in on the
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gold price, as well. gold right now down about slightly under the flat line there, 1,-658. well below the 1,700 mark. the cme globex has been closed for christmas. it's going to reopen at 6:00 a.m. eastern time. that goes for treasuries and the foreign exchange market, as well. >> as for action in the overseas markets, the u.k. is closed today for boxing day as are some of the former brish colonies. in europe the dax down about there about 35 points, around half a percent. and overnight in japan, the nikkei, the yen falling to a 20-month low. you have the nikkei up 1.5%. the nikkei -- yen versus the dollar as shinzo abe returns to office as japan's new prime minister, promising monetary and fiscal reforms. we have the shanghai composite there up about a quarter
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percent. all right. in today's top stories, the u.s. is five days away from going over the fiscal cliff. president obama is cutting his holiday vacation short, returning to washington tomorrow to continue talks to try to avoid that automatic tax hike and spending cut combination. that's the same day that congress returns to town. before the president left town on friday, he suggested a stopgap measure to freeze tax rates for people making less than $250,000 a year and extend unemployment benefits. reports say white house staffers have been quietly working with senate democrats to come up with a plan to avoid the fiscal cliff, but little progress has been made. a chinese ratings agency is putting the u.s. on negative watch citing troubles with long-term debt issues. on a statement on its web site, global credit says each political party insists on the proposition favorable for its own interest. it expects u.s. debt to rise to 105% of gdp this year and warns
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the country will probably fall into recession in 2013 if there's no resolution to the fiscal cliff. last year, it cut u.s. treasuries from a to a-plus with a negative outlook. and the holiday shopping season is drying to a close. early numbers suggest what started out strong is ending with a whimper. mastercard spending pulse unit estimates sales rose .7% over the past two months, which would be the weakest pace since 2008 during the financial crisis. many analysts had expected sales to rise 3% to 4%. several events may have, of course, pushed consumers to spend less this season including hurricane sandy and concerns about how tax hikes from the fiscal cliff could impact their wallets. joining us for more on the numbers is michael mcnamara of mastercard advisers. great to have you with us. many analysts, retailers had high hopes for the season. i think it's looking weaker than
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expected. of course we had hurricane sandy and we're dealing with the fiscal cliff, as well. what do you think the big driver was of these slower growth numbers? >> well, good morning. yes, you hit on two of the big ones. really the season tripped coming out of the starting gate with hurricane sandy. the impact in the northeast and mid-atlantic, both those regions of the country actually had negative holiday seasons for the holiday-related sectors that we track. other areas of the country that were not impacted by significant weather in the southeast, south central, mountain and west, were up 2% to 4% year over year. so really depended on where you were in the country, how but during the holiday season. >> okay. that's definitely interesting to look at, the regional breakdown. i also want to talk about promotions. every year we see the promotions start, it seems, earlier, and discounts are a little deeper. at the end of the day when we're tabulating these numbers, are deep discounts really the way to go, or does it end up hurting the retailers in the end? >> i think a couple of events,
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the weakness in the first part of november did spur some additional discounting in november. and that did seem to be effective in generating sales growth in the second half of november. that was relatively positive. the real issue was then early december, sales did decline again. and i think that had to stir really -- stimulate additional discounting that might have been somewhat negative for margin expansion for the retailers. it was a difficult season. >> all right. i want to talk about the online sales, as well. it's obviously easier for a lot of consumers to stay home and point and click the mouse and have the presents just be delivered. comparing in terms of online, it seemed that this was a strong start after black friday with cyber monday. some numbers came in really high. do you think the online or the brick and mortar is going to be strong when the numbers shake out? >> at the end of the day, online sales during the same period were up about 8.4%. we did see some good growth
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rate, again, right around the thanksgiving week and the week after thanksgiving that were in the 18% to 20% range for a brief period of time. however, you did see weak not at the beginning of november and returning in december that brought the numbers back down. whether -- poor weather conditions at the end of the season did help the online category or channel increase sales again back to the low teens at the end of the season. >> how much of the fiscal cliff or do you think the doubt around reaching a negotiation is impacting holiday spending this season? did that damper sales by any chance? >> yeah, there's a -- there's a correlation here. beginning of december when we start to see sales come down, the confidence numbers also start to come down. it's something that the media coverage really has brought home and really clarified what the fiscal cliff means to personal finance. and that debate really seems to be acting as -- almost creating a sense of gravity that's pulling down different elements of the economy.
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so whether it's consumer confidence and now spending, both seem to be having a negative impact on the environment. >> yeah. michael, i imagine it's difficult to get out and want to spend when you're worried about your taxes going up next year. and how you're going to allocate your budget. i want to ask about some of the places that we did see spending. what were some of the segment groups? was it apparel, electronics? you know, luxury has surprisingly held up a little bit. so where did we see the dollars that were spent go? >> sure. let's start with luxury. luxury nationally had a difficult year because -- primarily because about 20% of luxury retail sales originated out of the new york area. if new york has a difficult season, that's going to be difficult on the overall numbers. that said, in the southeast and the south central regions of the country, luxury sales were up 5% to 6%. so again, it depended where you were. but luxury retail sales did relatively well. other sectors, women's apparel did have a positive year.
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as well as furniture and furnishing were also up. primarily we think due to the housing market recovery. >> yeah. today also a big day for returns, i don't know if you got gifts and are planning on taking time off later to be able to swap them back. michael, how does the return situation impact the numbers that we see? we're going to have a lot of people going to the malls, right? a couple of thing will happen. one, they'll be returning items. you may get even exchanges there. i wonder if they're going to be spending more because they're out and about with their families. and also you have the issue of the gift cards because that -- the retail, the revenue from the gift cards is going to be booked once those gift cards are actually used. so how do these few days after christmas impact the numbers? >> well, first of all, i'm not returning anything. so anyone -- anyone gave me anything for christmas, don't worry. i love it. but in terms of gift card sales, you're absolutely right on the accounting on that. the late season storm, big blizzard that came across
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northern regions of the country, that may have stimulated additional gift card purchases. that tends to be a last-minute purchase area. so this last period of time, normally it accounts for the last week of december. accounts for about 15% of december retail sales. but that gift card redemption, that generates a lot of store traffic and a lot of opportunity for retailers to make up and clear out inventory for any sales that didn't occur during the season itself. >> all right. certainly we'll be watching that. of course, i like gift cards because it gives you the opportunity to get what you want instead of the ugly christmas sweaters that we saw yesterday. one last question. it seems like it's an issue of consumer confidence out there now. what's it going to take it get consumer confidence back up? >> well, i mean, i think we need to get resolution and certainty around what's happening with the fiscal cliff. you need to know what's going -- what is your paycheck going to look like in the first part of january. and what happen are your taxes ultimately going to be next year. until we get clarity around
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that, the same thing that we saw, corporate spending, business activity start to pick up on this last summer and fall. and now consumers in november and december started to pick up on this, as well, in that you really need to get resolution here in order for the economy to move forward. >> yeah. so many americans, of course, going to be waiting with baited breath to see what happens with the fiscal cliff. thank you very much for joining us from mastercard advisers. >> terrific. thank you. the u.s. economy is hanging in the balance with just five days left for congress to come up with a deal to avert the fiscal cliff. let's get to our senior economic reporter, steve leesman, with his predictions for the economy in 2013. >> reporter: trying to figure out what's going to happen in 2013 depends on one very important development -- whether the u.s. goes over the fiscal cliff in a few days' time, and for how long. if it's avoided, there's considerable upside for the economy. we could see at least one and maybe two quarters of growth
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above 3%. the kind of growth that would put people back to work and lower the unemployment rate. why? because business has been holding back investment amid the uncertainty. unleashing business spending would add to the growth from the nascent rebound in housing and from the consumer who has hung in there despite tough times. in fact, we could see unemployment drop below 7%. although it might first rise, more work into the work force who have been discouraged but can't find work. then could it fall. as for the fed, i think the market may be overstating its expectations for assets purchased from the central bank in 2013. at the current pace, the new round of quantitative easing will add $1 trillion to the balance sheet. i think it's likely to come in less, maybe in the $750 billion range. a lot, just not as much as markets think. so if we get the growth and the lower unemployment, that would likely mean somewhat higher interest rates. the attention will be fed asset purchases meant to keep down long-term rates, and better growth which will push them higher. i'm predicting we end next we're with a 2% to 2.25% ten-year
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treasury. so mortgage rates may already be as low as they will get. those are my predictions for 2013. >> all right. our thanks to steve for that. meantime, coming up on the show, will washington be able to get its act together to avoid letting the u.s. economy fall off a cliff? we've got a panel of washington insiders to give you the real story. plus, a closer look at the markets including a best emerging market performer this year. if you invested in this index, you'di inbe up 50%. we'll tell you what it is and what could see a pop next year. we'll bring you retail numbers as they trickle in. much coming up. [ male announcer ] it's that time of year again. time for citi price rewind. because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok.
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welcome back to "worldwide exchange." if you're traveling around london today, you better take the bus or hail a cab. for the third straight year, hundreds of london underground workers and drivers have gone on a 24-hour strike on boxing day. the first day of post-christmas retail sales. the union has a long-running dispute with tube management over bank holiday pay. and here in the u.s., support strike could be brewing. federal mediators have called for a meeting of east and gulf coast dock workers and shippers as they try to avoid possible strike next week. talks broke down december 18. and the union's contract extension expires monday. the union represent more than 14,000 workers at more than a dozen ports from boston to houston. the key sticking point -- container royalties or payments
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to union workers based on the weight of cargo. now back to the markets. before the break, we told you about the best performing emerging markets this year. but -- emerging markets this year. the third best performing market this year is estonia, up 36.51%. and at number two is pakistan with the karachi stock exchange 100, up 49% for 2012. and the best performing market so far this year is turkey's ise national 100 index. up 52.26% this year. now our next guest says a play in the emerging markets could be a good bet for a successful 2013. joining us now to highlight the key markets to watch around the globe is ron shaw, managing partner at gina ventures. how are you doing? >> good. good morning. >> very good morning to you. did santa bring you everything you were hoping for? >> that and then some. >> that and then some. good. let's talk about emerging markets now. i've spoken to you a lot about how in the last couple of years,
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of course, there has been a lot of positive sentiment around investing in emerging markets. however, i got to say over the past couple of months and even this year, there has been i would say the mood shifting to cautiously optimistic. can you tell us what's driving that change? >> yeah. i think you have to continue to be cautiously optimistic for the emerging markets because obviously there's a growth story there. there's a lot of growth that investors want to capture. there's still a lot of outstanding risk. we saw a lot of that risk play out this year both on the government side, the reform side, as well as currencies. so i think there's definitely a handful of risks. and you have to kind of -- the play for emerging markets is change. i think when you used to invest as efts, you have to look at the markets differently. i think you have to be more careful. >> all right. let's focus on india. i know you just got back from a long trip where you were evaluating the investment landscape in india. obviously we've seen a lot of foreign investors allocate capital into this market. we are looking at the rupee
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depreciating significantly over the last year. the company dealing with other problems including lack of infrastructure, some policy changes. what is your recent -- i guess your updated outlook on india going forward? >> well, the local market has justice done phenomenally in 2012. up 25%. but it didn't help u.s. dollar investors because the currency fell the same amount. so really everyone kind of broke even even though the market took off this year. i think india is still a market where you want to keep building positions gradually over time. there's been a lot of issues around the government. i think the instakt around the government and people's predicting how long it will take to push back reforms has impacted the market quite a bit. i think one thing under the surface in india and china that all investors need to be aware of is the fact that corporate debt is now really building up to almost unhealthy levels. and i would keep an eye on where
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corporate debt levels are in companies investing in. >> when i was a corporate analyst in india tracking markets, technology was considered the engine of growth for the country and one of the bright spots for the market. is technology still one of the areas you are tell clients to invest in in india, or what are the sectors you're looking at? >> i think there's two sectors whether you look at india, china, or asia. there's two sectors we like. it's technology, as you said. i think that's one that -- it's a bright gem. you know, it went from, in india, from a bpo outsourcing business and has grown to an innovation business where brands are being developed and real technological gains are being had. the other sector we like is health care. the demand for health care in these markets is just continuing to grow steadily. obviously people are having longer lives, having more disposable income for health care and treatment. and so those are two sectors we really like. >> okay. and curious, as an emerging market investor, how closely are you watching the fiscal cliff negotiations here in the u.s., the debt crisis in europe?
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how closely are you watching factors and how does that impact the way you invest in emerging markets? >> emerging markets continue to be married to developed markets. the correlation is definitely still there. so what happens in the u.s. and europe plays out to a great degree in the emerging markets. so i definitely have my eyes there. i think what you're starting to see in china is the economy shifting to more domestic-facing, domestic focus, which i think is very good for china. it's going to take a while to get there. it's very good for china. but of course, the fiscal cliff will have a huge impact on where emerging markets and the rest of the world goes this year. i think if you really want to play it smart, you look at consumer-facing businesses, health care technology, emerging markets. you can't lose. >> well, ron, that's what i was going to ask you. you brought up india and the rising consumer is such a big piece of the growth story there. can you drill down for me more on how we can tap into that and capitalize on it? >> absolutely. so here's the issue with the consumer. obviously the consumer story is the biggest thing for the emerging markets. that's the story for the next
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decade at least. the issue is that a lot of the adrs that we can trade don't really touch the consumer as much as we'd like. there are a few. on the technology side, we like a number of stocks, like we like china mobile. that's chl. that gives you the emerging consumer, that's really moving into mobile. we like qihu. that's a stock that really gets into all the p.c.s and the whole technology landscape. we like some health care stocks like wushi pharma tech and dr. readies. ways to play it if you want to play the consumer in a direct manner. i think the problem with efts is you don't get enough consumer exposure in those. >> and as you were saying, as asia recalibrate to a more domestic focus, focussing in on their domestic economy, you were saying latin america and russia could be the stars in the out-- and the outperformers in 2013 s. that correct? >> absolutely. okay, there's two things. i think demand, you know, even though they say china's softening, i think actually
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their demand for resources is continuing to stay stable because as they reshift gears into becoming a domestic economy, they still need inputs. china is not a very natural resource-rich country. they continue to need to import natural resources from both russia and latin america. japan, by the way, is a huge story for 2013. i think japan is going to control their currency issues and really going to start pushing up export. so they're going to be pulling in natural resources from russia, as well. i think both russia as well as latin america are going to be huge performers. of course, government reform plays a big role in that. but i think that's also looking good. >> thank you, ron. so great to get your insight this morning. that's ron shaw with gina ventures. >> thank you. all right. coming up on the show, want an ipad mini but can't get your hands on one? a new report saying that apple may not be able to keep up with demand for the smaller tablet. we're going to tell you why coming up. plus, china's need for speed doesn't just apply to its
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economic growth. we'll explain that next. and as we go to break, take a look at some the big winners and losers on the dow this year.
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with welcome back. u.s. traders will begin trading in just over 30 minutes. the cme globex has been closed for christmas and will reopen at 6:00 a.m. eastern. now to some of the other stories making news. former president george h.w. bush remains in a houston hospital as doctors say his health took a turn for the worse right before christmas. the 88-year-old former president has been in the hospital since november 23 with a lingering bronchitis-like cough. he had hoped to spend the holiday at home but developed a fever. doctors are cautiously optimistic that bush will recover but want to build up his strength and balance his medications. >> wish him the best during this time. it wasn't a quiet christmas day for many across the south as severe thunderstorms and tornadoes blew roofs off houses and knocked down power lines from louisiana to alabama. that storm system is moving east to georgia and the carolinas. snow and ice are the problem in the midwest.
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blizzard conditions hit parts of illinois, indiana, and western kentucky with the white stuff headed for the northeast later today. better be time to bundle up. >> all right. and china is home to the world's largest high-speed railway. it runs more than 1,400 miles in beijing in the north to the south. it will run at speeds of 186 miles per hour cutting down travel time between the cities from 20 hours to just eight hou hours. china planning a grid of high-speed railways with four east/west and north dlsh south lines by 2020. and are all netflix users have a merry christmas? the video-streaming service having problems this season. we've got the details coming up. plus, lawmakers have five days to rise above partisanship and avert the fiscal cliff. we've got a panel of washington insiders to explain how businesses could get hit at the end of the year.
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high name is alan shortall, founder and ceo of unilife corporation. if the fiscal cliff doesn't get resolved, there's no question the u.s. economy is going to go into recession. we closed down our manufacturing in china and relocated to the u.s. for other companies to consider following our lead, they need to trust that our leaders in washington will actually lead. think outside the box. create incentive for businesses to invest in the u.s. economy.
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still ahead on "worldwide exchange," fiscal cliff fiasco. president obama cutting his trip to hawaii short to work a deal that could avoid the fiscal cliff in a few days. we'll break down what's at stake in "your money." if you got fewer presents under the tree, you may be ready. spending numbers are coming in, and they're not pretty. plus, new numbers for apple's ipad mini and more. that's coming up on "worldwide exchange." good morning and welcome to a special edition of "worldwide exchange." i'm jackie deangelis along with seema mody. ross and kelly are off for boxing day. they'll be back tomorrow. >> that's right. let's get a brief check on the markets this morning. energy and metals are trading at this hour on the nymex. you see crude oil up .6%. brent crude also up. and take a look t yellow metal,
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gold. down just fractionally. now u.s. futures will begin trading in about a half-hour. the cme globex has been closed for christmas and will reopen at 6:00 a.m. eastern time. that also goes for treasuries and the foreign exchange market. as for the action in the overseas market, the youu.k. is closed for boxing day as are british colonies, hong kong, australia, new zealand. in europe, the dax in germany is up and running. we are higher -- lower, rather, sorry, by half a percent. overnight in japan, the nikkei, that was higher. let's see the nikkei up about 1.5%. now the holiday shopping season is drawing to a close. and early numbers suggest what started out strong is ending with a whimper. mastercard spending pulse unit estimate sales rose .7% over the past two months which would be the weakest pace since 2008 during the financial crisis. many analysts had expected sales to rise 3% to 4%.
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earlier we spoke with michael mcnamara from mastercard advisers about the impact the fiscal cliff may be having on consumers. listen in. >> beginning of december when we saw the sales numbers come down, confidence numbers come down. something the media coverage really has brought home and clarified what the fiscal cliff means to personal finance. and that debate really seems to be acting as -- almost creating a sense of gravity that's pulling down different elements of the economies. >> spending pulse says even online shopping which has posted double-digit gains in past years was muted, rising just 8.7% this year. and now to the latest in washington. the u.s. is five days away from going over the fiscal cliff. president obama cutting his holiday vacation short, returning to washington tomorrow to continue talks and try to avoid the automatic tax hikes and spending cuts. that's the same day that congress returns to town. now before the president left
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for hawaii on friday, he suggested a stopgap measure to freeze tax rates for people making less than $250,000 a year and extend unemployment benefits. and in case you missed all the political drama, take a look at how the fiscal cliff debate has been playing out in washington. >> the fiscal cliff, yes, it is still looming if you're out there wondering. >> i think we could be taken to the brink again. >> the market is responding to the pending fiscal cliff. >> business has stopped investing. business has stopped spending. business has stopped hiring. >> nobody knows what's going to happen. there's outlandish guesses on both sides. >> it wouldn't surprise me if we go past january 1. >> you can't tax your way out of this. you can't cut spending your way out of this. you can't grow your way out of this. >> another two million people will lose their job. unemployment will go to over 9%. why would we do that? >> president obama is meeting with high-profile chief executive officers today. >> we don't legislate, but we
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know a lot about what the consequences are of the failure to reach an agreement. >> we're just here to support doing the right thing. putting america back to work. >> we've got to make sure that taxes don't go up on middle-class families. our economy remains strong. that we're creating jobs. >> the time for the president and democrats to get serious about the spending problem that our country has. >> is the administration prepared to go over the fiscal cliff? >> absolutely. >> how about we stop all the press conferences, statements and speeches, stop the personal and political attacks. >> people have a lot of different views. i'm willing to compromise a little bit. >> the president keeps opening doors for the speaker to go through. and with this action that the speaker announced, it slammed the door in the president's face. >> time's running short. i'm going to do everything i can to protect as many americans from an increase in taxes as i can. >> are you guys just incompetent or what? i mean, if you can't do this, if you don't do what the american people pay you to do, why don't you just step aside and put somebody in that can get a deal
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done? >> we are one decision away from restoring our fiscal and moral authority around the world. let's just do it. >> is jpmorgan taking any steps in preparation? >> we're praying. >> call me a hopeless optimist, but i actually still think we can get it done. >> so are we going to have a deal or not? let's bring in jake sherman, congressional reporter with "politico," and josh boke of "the fiscal times." jake, want to start with you. five days before the end of the year. a lot of people believing that a deal would come together in the 11th hour. we're not really seeing that take shape. we heard tim geithner saying that the package that democrats were prepared to go over the cliff. do you really believe that both sides will do it? >> i think it's certainly a possibility. i mean, a lot of things are happening now. but there are no real talks. the president is coming back from hawaii. speaker john boehner has not even committed to bringing the house back into session. the senate will come back on thursday. and not deal with the fiscal cliff but deal with spending
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bills to clean up new york and connecticut and new jersey from hurricane sandy and reauthorize some intelligence bills. so i mean, there's no real deal in the offing. there's nothing going on behind the scenes that would lead us to believe that anything would get done before january 1. >> all right. josh, out to you. obviously a lot of the discussion has been around the kind of deal that we would get if we do get something. if a deal does come through, it -- more likely will not be comprehensive, right? there's going to be a lot of negotiating that occurs after the first of the year. i guess my question to you is, does this leave the markets open to turmoil and more volatility as we head into january? >> the markets are going to be left open to turmoil and volatility, period. what we've seen is that despite the stakes getting higher, this isn't a game of poker but one of go fish. and no one seems to be fishing their wish. republicans are working with a weaker hand because they have to do a deal that involves a greater democratic coalition as a result of the failure of plan
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b. >> jake, question for you -- you know, last time you came on our channel, you instead no deal is reached, republicans will get the blame from voters. that's at least what the polls were indicating. is that still the case from what you're seeing? >> absolutely. and the kind of turmoil that we've seen on capitol hill and in washington over the last couple of days have reinforced that. house republicans were unable to get enough of their members of congress to vote to keep tax rates low for income under $1 million. so they've been unable to put something on the floor, pass it, and establish a position beyond extending all rate which is a non-starter for president obama. so yes, republicans are going to get blamed. but the way they see it privately, their numbers are so low they really don't have much to lose. >> yeah, and that brings up a good point. when you look at boehner and how he's been acting throughout this whole process, i really think that he's known to a certain extent that he's had a weak hand. but i feel like the republicans feel at this point they have really nothing do. they can just put it in the lap
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of the democrats and say, you know, you figure it out. >> i think that's right. and i think their talking point now is that it's up -- up to the senate to act. house republicans have passed a bill. they passed a bill to extend all tax rates. that bill is a non-starter. everybody knows that. so now the senate is going to come back in this week. what i think we'll see is the senate will pass something. if the senate passes something, the house will come back into session. if the senate is not able or is unwilling to pass anything, the house isn't going come back. we're going to go over the cliff and deal with this in january. that's the likelihood i think. >> yeah, there are big ram sf z sfikzifications if -- ramifications if we go over the cliff that will impact taxpayers and the markets, as well. josh, want to toss this question to you. why do you think the leaders are playing chicken here? >> because it's very easy to do. they have a difference in national constituency versus what they each have there n their congressional districts.
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gerrymandering's creating tremendous schisms in congress and what the country wants. what we've to see look at per jake's point is there's tremendous upside for democrats on this. gallup has new numbers showing tremendous poll increases for harry reid and congressional democratic leaders. the real question is can the democrats seize this opportunity to their advantage. >> all right. wewe he to leave it there, gentlemen. thank you for coming on the program. i know it's certainly early. our thanks, of course, to jake and josh. >> thanks. futures will begin trading at the top of the hour. we'll prepare for your market open. so be sure to keep the channel on cnbc. plus, problems for netflix. we'll tell you why the video streaming service may be getting some coal in its stocking this year. if lawmakers do not reach a budget deal to avoid the fiscal cliff, federal taxes will be raised by more than $500 billion in 2013. an average of almost $3,500 per household.
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or you can get out there and actually like something. the lexus december to remember sales event is on. this is the pursuit of perfection.
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welcome back to "worldwide exchange." if you got an ipad mini under the tree this year, you're not alone. the new apple tablet has been in short demand worldwide. taiwan-based suppliers expecting fourth quarter shipments to top eight help units. sources say that companies have produced enough parts for ten million to 12 million minis but don't have enough touchscreen panels to go around. shipments are expected to rise to 13 million in the first quarter. on monday, of course, apple
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closing up fractionally at $520.17. netflix has restored its streaming video after an outage knocked out service to subscribers across the u.s., canada, and latin america on smoef christmas eve. netflix has 30 million streaming customers worldwide, but the company is blaming a glitch at the web services cloud computing center in virginia. it's the latest mishap for amazon, a web outage last year knocked out sites such as readit and foursquare. netflix closed down 1.2% on monday at about $90. all right. let's head to the cme. electronic trading will continue at the top of the hour. great to see you. >> how are you? >> i'm good. let's start with the rest of the year. we've got four trading days left. we're waiting for news out of washington. that's going to be a catalyst.
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typically we see light volumes, we don't see a ton of trading. what do you expect the action to be while we're waiting for this decision? do you expect anything out of the ordinary this year? >> no, i don't. i think we'll see light volumes again, too. i think we're going over the fiscal cliff. but what i think is, the market has grown accustomed to that. small caps are up 9.5% since mid-november. that's optimistic in my mind. what i think they think is that we go over the fiscal cliff and sometime in the first week and a half, that's the political theater where the republicans can then cut taxes instead of raising taxes on anyone. and all will be well. i do think, however, the one thing that i'm worried about is the markets are okay with that, and they -- in our business we say buy the room or sell the facts. they price in this good outcome that happens the first week of january. then there's no reason left to buy. we priced that in and go lower. i did establish shorts on christmas eve. >> jim, good morning, it's seema. how you doing? >> good. >> good. you know, in terms of where we are at, in terms of fiscal cliff
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negotiations, how would you advise investors to invest in the short term? if you're watching the political rhetoric out of washington, how would you tell people at home to really invest? >> i think there's things that were beaten down hard for tax purposes in anticipation of raising a capital gains tax. it's a bad time to move into apple. things like intel. something that the market beat up all year, you know, in the name of it being old world p.c. i think it -- push it to a point where the valuations are reasonable. stuff -- some of the utilities like s.o., aep, hit hard for tax reasons. when the new year starts, i think people will start moving back into those. i think there's things to buy. >> jim, it sounds like you're saying risk on as we approach january 1. i want to talk about the vix. i know that you watch that closely. we're watching it sitting under 20 now. not near the highs we saw when we were dealing with the debt ceiling debate. what's different about the fiscal cliff and what we were
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seeing then that's keeping the vix so low now? >> well, i think what it is is that the market's come to the realization that the budget thing is going to be clumsy. but at the end of the day, the fed is still prepared to inject more liquidity if things start to look bad. we have this push/pull where the market doesn't believe we can have any really dramatic moves in either direction because of that equilibrium that's reached. i'm not sure i necessarily agree. i'm a little more cautious than the vix says the overall market is. i think that's why it's there. >> okay. our thanks to jim, cnbc contributor for joining us. futures are about to begin trading in the u.s. we'll tell you why the next few days could be volatile for your portfolio. and coming up, a look at the s&p winners and losers this year.
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welcome back. the u.s. futures are about to open for trade. the globe your next question has been closed for christmas and will reopen at 6:00 a.m. eastern time. it's been quite a year for the energy sector. sharon epperson with a look at what could be in store for the industry in 2013. >> reporter: on the road to north american energy independence, the next decade is crucial. and in the new year, the dramatic rise in u.s. oil production will continue its extraordinary climb. at the same time, u.s. petroleum supplies will have a greater reach. in the first quarter of 2013, more of the nation will have additional pipeline capacity. helping to alleviate the abundance of domestic supplies and perhaps mitigate any meaningful price gains. after a year full of fluctuations, by the end of 2013 oil prices my not stray far from where they started the year. it's no secret we have a lot of natural gas. enough to have flooded the market with more supply than the
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nation could possibly have consumed this year. but those days may be coming to an end. what will we do with all this natural gas? in the new year, the u.s. will find more ways to utilize or export the cheaper, cleaner fossil fuel and set the stage for continuation of rising prices. >> what should investors expect at the open? we have david katz, chief investment officer with matrix asset advisers, with us this morning. good morning, david. how you doing? >> good morning. all is well. >> you know, santa did not bring a fiscal cliff deal for christmas this year. i want to know how do you think the uncertainties around the fiscal cliff will impact the trading day and the rest of the week? >> i think basically any negative news out of washington is going to put a downward bias on the market. lack of progress, downward bias. ultimately the government will get its act together. the longer it tarkkes, it has slowed the rally of the last
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month. we are fearful if they take too long into january to get this resolved, it will slow the government going into the first quarter. if the government gets its act together, we think the economy is poised to do better next year. we think the stock market is poised to have another good year. >> we're looking at a potential increase in the dividend tax rate. so how would you trade some of these high-dividend stocks including some of those stocks in the health care sector, utilities, what are your thoughts? >> we think ultimately the tax on dividends is going to go from 15% to 20%, plus the health care tax of about 3.8. it will be 23.8. if you look at dividend stocks that are paying 4%, 4.5%, that's still a lot better than you get in a money market, which is .1% or .2% or government bonds which is about 1.5%. we don't think it will have a meaningful impact. we think dividend stocks are going to be a good bet over the next year. slow and steady type of thing. we're not looking for them to shoot the lights out. >> you know, i want to talk about the fed for a second because all eyes were on the fed
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this year as we were looking at the easy money policies, stimulating the economy. of course we're going to be looking next year to see who could potentially replace chairman bernanke. any thoughts on that and how much fed watching we'll be doing in the coming year? >> we think the fed has done a phenomenal job of keeping the economy from going off course. we think they've done about everything that they can do. so it really is up to the government to do better and to resolve this fiscal cliff. in terms of who the next fed chairman's going to be, we don't have a sense on that. we think bernanke has done a masterful job, and we really do like him in this position. >> david katz, thank you very much for your time. >> thanks a lot. that wraps up this special boxing day edition of "worldwide exchange." i'm seema mody. >> i'm jackie deangelis. it was great to be here with you this morning. don't forget to tune in to cnbc.com every tuesday and thursday at 1:00 p.m. eastern for my show, "futures now." "squawk box" is up next. >> have a great morning. [ male announcer ] it's that time of year again.
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good good morning, the fiscal cliff countdown clock is ticking. president obama and lawmaker will return to washington in hopes of inking a last-minute deal.

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